Directors at three different companies have been punished for trying to exploit the Government’s Covid-19 financial relief schemes.
The scheme, which ran until March, provided loans of up £50,000 to help struggling businesses survive the impact of the pandemic.
The service said: “The use of a Bounce Back Loan must be for the benefit of the business and never for personal use.
“Failure to account for how a Bounce Back Loan was used, or using it for personal payments, can result in being disqualified as a director or the extension of bankruptcy restrictions.”
In a statement the service said Rafael Henrique Scher, who is 38 and from Milton Keynes, was a director at a cleaning company called N&S Solutions Ltd, which Companies House says is registered in Salisbury, Wiltshire.
It said the company entered administration in August 2019 with debts of around £150,000, then went into liquidation on June 23, last year.
The service said Scher used N&S Solutions to apply for a Bounce Back Loan of £30,000 on May 15, last year – despite the company being insolvent and no longer trading and with, what it said was, “no prospect of repayment of the loan”.
It said Scher used the £30,000 to pay £29,940 to a single trade creditor, but ignored other creditors with sizable debts, and company tax liabilities of more than £94,000.
Following the investigation it said Scher signed a disqualification undertaking which prevents him from acting as a director for nine years.
The Insolvency Service said that in another case two directors of a Nottingham fried chicken restaurant have had credit restrictions imposed and have been banned from acting as company directors without the permission of a court.
It said Mujeebullah Khan, aged 34, and Muhammed Omair Javaid, 33, ran a Chunky Chicken outlet until December 2019, when they sold the business.
However, the service said Mujeebullah Khan improperly applied for a £50,000 government-backed Covid loan in the business name, despite the fact it had been sold.
It said the money was used to repay a business creditor who was also a relative of Muhammed Omair Javaid.
Both Mujeebullah Khan and Muhammed Omair Javaid made themselves bankrupt this May, citing debts of over £200,000 that included the Bounce Back Loan.
Following the investigation, they signed undertakings that mean the bankruptcy restrictions last eight years.
The third case saw eight years of bankruptcy restrictions imposed on a Nuneaton publican.
The Insolvency Service said Malcolm Wilks, aged 57, had run a pub called the Royal Oak pub in the town since 2014.
It said in March 2020, at the start of the pandemic, the pub closed and Wilks entered into an Individual Voluntary Arrangement (IVA) and started claiming Universal Credit.
The pub later reopened and traded for a few hours a week until it finally closed in November, 2020 due to fresh Covid-19 restrictions.
The service said on November 11, 2020, Wilks received a Bounce Back Loan of £19,000.
It said a day later, the supervisor of his IVA terminated the agreement, and said Wilks had only made two repayments.
The Insolvency Service said its investigation established that Wilks transferred nearly £17,000 of the Bounce Back Loan into his personal bank accounts.
From there, he paid more than £4,100 to his ex-girlfriend and spent £1,120 on online gambling.
It said almost £3,500 was withdrawn in cash and cannot be accounted for, while £6,500 was allocated as wages to cover the period when he wasn’t working.
It also said Wilks also received £1,100 in business rates refunds weeks prior to declaring himself bankrupt.
It said he received a further £10,500 in subsequent weeks but failed to disclose this to the Official Receiver.
Wilks has now signed a bankruptcy restriction undertaking that extends the duration of his bankruptcy for eight years.
Alan Draycott, the deputy Official Receiver, said: “The Government loan schemes have provided a lifeline to millions of businesses across the UK – helping them to continue trading during the pandemic and protecting millions of jobs.
“As these three cases show, the Insolvency Service will not hesitate to investigate and use our powers against those who abused the Covid-19 support schemes.”
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.